Graft-versus-host disease (GVHD) is the leading cause of morbidity and mortality following allogeneic hematopoietic stem cell transplantation, an established therapy for patients with hematological malignancies. Current strategies to diminish GVHD include T-cell depletion and immunosuppressive drugs, which are associated with an increased risk of tumor relapse, opportunistic infection, and/or toxicity. Novel approaches acting intrinsically on the immune system are clearly needed. Myeloid-derived suppressor cells (MDSCs) consist of a population of myeloid precursor cells that exhibit potent suppressive activities capable of dampening anti-tumor responses, autoimmunity, and allo-responses in graft-versus-host diseases (GVHD) and organ transplantation. Our preliminary results indicate that MDSCs have several attractive attributes as helper cells to inhibit GVHD without significantly compromising graft-versus-leukemia/lymphoma (GVL) in a murine model, resulting in the establishment of long-term survival. Recently, we also demonstrated that MDSCs acquire M1 or M2 functional macrophage phenotypes through regulation of PIR-B (paired immunoblobulin-like receptor B and human counterpart inhibitory immunoglobulin-like receptors B, LILRBs) signaling, which may facilitate the development of antitumor responses or mediate immune suppression and Treg activation, respectively. The objective of this proposal is to understand the mechanism by which MDSC biological function is regulated and to devise an optimized protocol for directing the functional activities of MDSC toward suppression of GVHD while allowing sufficient GVL activity to eradicate tumors. Based on the results of ou preliminary studies, we hypothesize that: (i) The functional phenotype of MDSC can be modulated by PIR-BL ligation and (ii) The presence of MDSCs with a persistent M2 functional phenotype may be sufficient to prevent GHVD and retain GVL ability. Three specific aims will be pursued: Aim 1. Study the regulation of MDSC function and the associated effects on GVHD. Aim 2. Study the effects of PIR-B ligation on MDSC as related to inhibition of GVHD and the corresponding signaling regulation in an irradiated host. Aim 3. Study the mechanism and effects of MDSC mediated regulation of GVHD vs. GVL through PIR-B/LILRB engagement in mouse GVHD models and in a human xenograft NSG mouse model. The proposed studies will provide the basis and scientific principles for future clinical translation.